Alex Hesterberg cut his teeth in Customer Success 20+ years ago in Consulting, then Services. Since then, he’s gone on to be VP and CCO at companies like Riverbed, Sailthru, Pure Storage, Turbonomic, and now Delphix—many of which he led through acquisition or IPO.
It doesn’t take a long conversation with him to know he’s a true operator. But one part of Alex’s playbook in particular caught our attention: Presales reports into him, and that’s been the case for the past few companies where he’s led Customer Success. Beyond being “a best practice” in a land and expand model, owning Presales helps his team ensure that bad fit customers aren’t getting through to CS.
Below you’ll find our interview (edited for clarity) where he explains when Presales should report into CS, how to measure their success, compensation, and how they influence the types of customers being sold to.
Chris: You’ve owned Presales at four different companies—Sailthru, Pure Storage, Turbonomic, and now at Delphix. I have to imagine the head of Sales or Revenue at some of those companies have wanted control over the Presales team’s focus. How have you overcome that?
Alex: So backing up, only once in my career have I been lucky enough to have a “three-legged stool” model, or 1-1-1 model where there’s 1 Account Manager to 1 Sales Engineer (SE) to 1 CSM. It’s an expensive model, so you don’t see it often. But when there’s a dedicated Sales Engineer to each AM and CSM, that person’s capacity is absolute.
Most companies operate in pooled models where Sales Engineers are shared resources. That’s where the tension emerges: you get Sales saying “I need that SE” for some dedicated capacity.
The way we combated that tension was to start by creating a framework:
- We mapped out an SE’s activities, which fall into four buckets: discovery, presentation time, demos, and Proof of Values (POVs)
- We created guidelines around the POVs, meaning “they take two weeks” and here are the three or four things we need to demonstrate during that time.
- And then we calculated how many of those activities an SE could do in a quarter.
Bringing that framework to Sales cut out all the guesswork around an SE’s capacity, and incentivized them to be more intentional about when SEs are brought in to a deal, what they’re doing, and for how long.
And by the way, we’ve seen that there’s so much capacity particularly in the technical field that gets lost to exploration as opposed to going towards where the money is really being made. For example we have a really high win rate from accounts that complete POVs—like 80 or 90%. So if you see that, all of a sudden that’s really the activity we want SEs spending the most time on. We should look to shrink the other three activities (discovery, presentation time, demos) by giving those activities back to the Account Managers and CSMs, so that extra SE time can be spent on POVs. Because that’s where the money is made.
In short, I’d say we’ve avoided friction by framing out how teams get access to those technical resources without wasting their time.
Chris: When you’ve joined new companies, how have you handled this conversation with the CRO to take ownership of the Presales team?
Alex: The first real question I ask is, what is the mix of our go-to-market strategy? What’s the mix of revenue that is coming in the door, and what are your expectations on that mix of revenue for the fiscal year?
If the answer is 80% or 90% is coming from net new logos and only 10% is coming from our install base, then okay—anybody can own the Sales Engineering team. But if it’s more like we’re expecting 60%, 70%, or 80% to come from the install base and expansion motions, then Sales Engineering needs to live with the customer team.
In the latter case, when the company is focused on a land and expand motion, having SEs aligned to Sales but within the Customer org allows us to ramp SEs to the long-term use cases that customers have. They’re already aware of the second and third products a customer may buy when they’re in their first sales cycle.
So it’s less about “who people report to” and more about the motion.
Chris: How do you know if the Sales Engineering team is successful? And how are you handling compensation?
Alex: Our job is to make sure that SEs are focused on the most meaningful work that's tied to revenue and tied to their own commission checks. So for SEs, it’s a question of are they doing the right activities, are they successfully delivering on those activities, and are those activities taking a reasonable amount of time?
SEs log what they’re doing every week—not necessarily time sheets, but their activities across the four buckets of work: discovery, presentations, demos, and POVs. We look at what they’re focused on, their win rates on POVs (which usually comes down to “were they successfully completed or not”), and the duration of time spent on activities.
As for compensation, SEs are paid on new logos, renewals, and expansions from existing customers. So they essentially get paid across the board. CSMs on the other hand are paid for renewals and expansions from existing accounts. We look at how many expansion opportunities they create in a quarter. (I prefer CSMs have a selling mentality and are incentivized to look for expansion opportunities.)
Chris: So what role does the SE team play in either defining the ICP or ensuring customers are a good fit in the sales process?
Alex: I’ll say first off that Sales reps are paid on renewals and Sales leadership have components of their variable tied to renewal rate. So they already have some incentive to acquire buyers who will become successful customers.
But you’re right, an SE still plays a critical role in ensuring customers are a good fit. In their relationship with a customer, they can see whether a customer has the right use case, technology, and existing processes to be successful with a product. If it’s a bad fit, the customer probably won’t make it through the POV (which requires all these steps to be met based on our Ideal Customer Profile. It’s really hard to meet those requirements if it's not a good fit.)
We also take ICPs one step further: We use them to guide our expansion playbooks. Sales Ops and CS Ops come together to look at the install base over the past three or so years to identify patterns. How many customers are in this vertical versus that vertical? What was in their first deal, their second deal, and so on?
Then we feed that information into ICP documents that CSMs can use like a map. Your customer is in this vertical with this product? Great. Here’s what they’re most likely to buy next, and here’s what needs to be in place for them to do so (e.g. different buyer or champion roles, use cases, etc.). The CSM can work towards creating those conditions. So we use ICPs to continuously drive value with customers.
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